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Why Bajaj Finserv Share Price is Falling

Jan 24, 2023

It's been over four months and yet I clearly remember waking up on 14 September 2022, by the alarm going off.

I couldn't resist looking at all the notifications on my phone, like every other millennial. Out of a plethora of notifications, there was a particular one that woke me up with a shock!

A headline read, Bajaj Finserv share price falls 90%?

The headline was indeed misleading as the company's stock price did not suffer such a sharp correction, but the fall was a result of stock adjustment due to bonus issue and stock split.

Ever since this corporate action, share price of Bajaj Finserv has seen a steady decline. In 2023 so far, the stock is down 14%.

Bajaj Finserv stock split and bonus

On 12 September 2022, Bajaj Finserv's share price closed at the price of Rs 17,157.8, and on 13 September 2022, the company's share price opened at Rs 1,757, almost 90% lower compared to the previous day's closing price.

Bajaj Finserv - one of the consistent compounding stocks, split the face value of its shares from Rs 5 to Rs 1 and the market price was adjusted proportionately to the reduced face value of the share.

The main purpose of the stock split is to modify the face value of a stock. So, when a company goes for a 1:5 split on shares with a face value of Rs 5, it means that the face value will be reduced to Rs 1.

Along with this, the company also issued a bonus shares in the ratio of 1:1. A shareholder of Bajaj Finserv received one extra share for each share held in the company as on record date. When a company issues bonus shares, the number of shares multiply whereas the market cap remains the same.

Post the bonus issue and stock split, the liquidity of shares increased.

A company's share price may fall after undergoing a stock split because the value of each individual share is reduced. The total value of the company and the number of outstanding shares remain the same, but the price per share is lowered. This may make the stock less attractive to investors, causing the share price to decrease.

However, it's important to note that a stock split by itself does not determine the stock price, the market conditions and the company's performance are more important factors.

Which brings us to the second reason.

Dark clouds hover over subsidiary - Bajaj Finance

When a kid misbehaves in school, the school authority often calls up their parents to complain about the kid's behaviour. Similarly, hypothetically speaking, when a subsidiary misbehaves, investors complain to the parent company.

Bajaj Finance - the investment arm of the Nifty 50 stock - Bajaj Finserv has been in the news for the past couple of weeks because of its underperformance.

The fall in Bajaj Finance is not recent. In 2022, Bajaj Finance underperformed both the Sensex and NIFTY for the first time in 14 years. Worst yet, this was the first negative annual return since 2011.

2023 is no better... The stock was down another 9% in the first few days of the new year, once again underperforming the Sensex.

This comes on the back of growth concerns. Bajaj Finance has over the past decade, reported stellar results, surpassing its own feat.

But the company's recent performance has remained below estimates and growth is not as good as past. The growth rate seen and projected by the company is muted if compared to corresponding period of previous years.

The word on the street is that the stock could be in for a major correction and the worst is yet to come. We even covered a detailed editorial on Bajaj Finance: death at a funeral.

When Bajaj Finance share price is falling, Bajaj Finserv does not look the other also sees downtrend.

The dull prospects of Bajaj Finance have led to a fall in Bajaj Finserv's share price.

How Bajaj Finserv has performed recently

Bajaj Finserv share price is down 17% in a month. On a year-on-year (YoY) basis, the shares are trading lower by 23%.

The company touched its 52-week high of Rs 1,846 on 13 September 2022 and its 52-week low of Rs 1,077.7 on 01 July 2022.

About Bajaj Finserv

Bajaj Finserv is the holding company for the various financial services businesses under the Bajaj groups.

It serves millions of customers in the financial services space by providing solutions for asset acquisition through financing asset protection through general insurance family protection, and income protection in the form of life & health insurance as well as retirement & savings solutions.

Bajaj Finserv was formed in 2007 as a result of its de-merger from Bajaj Auto and is the holding company for the businesses dealing with financial services of the Bajaj group.

For more details about the company, you can have a look at the Bajaj Finserv factsheet and quarterly results on our website.

You can also compare Bajaj Finserv with its peers.

Bajaj Finserv vs Axis Capital

Bajaj Finserv vs IIFL Finance

Bajaj Finserv vs Cholamandalam Financial Holdings

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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